June 12, 2012

Beyond Performance Management (40 Tools)

Issue No. 251 of Your Weekly Staff Meeting highlights a new book from Harvard Business Review Press on how to select the right management tool—at the right time. The authors describe 40 tools in detail. It’s excellent! Plus, this reminder: check out my Management Buckets website with dozens of resources and downloadable worksheets for your staff meetings.

Bogus RationalityYikes! A new employee, an experienced user of the Total Quality Management system, is lobbying hard for you to adopt TQM. Yet a new board member is shocked your organization doesn’t use the Balanced Scorecard approach. Then there’s that major donor, a zealot for Six Sigma (TQM on steroids), who has offered a fat check if you implement that best practice.

So how do leaders and managers differentiate between all of the management systems and tools—and pick the right one, at the right time, for the right reason?

Harvard Business Review Press has come to the rescue with a new book this year, Beyond Performance Management: Why, When and How to Use 40 Tools and Best Practices for Superior Business Performance. It’s a keeper.

Authors Jeremy Hope and Steve Player write, “Many tools and practices suffer from poor practice. And having absorbed huge amounts of management time and expense, companies abandon many tools as the consultants move out and the internal project champions move on. Abortive tools and systems are a major source of management frustration, added complexity, and wasted time and cost.”

They add, “Too many organizations rush into buying and implementing tools without first considering the fundamental question: which problem are we trying to solve? Framing and answering this question would avoid many expensive mistakes.”

Or as Peter Drucker said, “I was taught that you make a diagnosis before you operate. And nine times out of ten, when you make the diagnosis, you don’t operate.”

The workplace has changed, of course, since many of the classic management tools were born. Many of these tools still work yet, say the authors, but must be applied with “empower and adapt” management models versus the old “command and control” top-down approach.

The 40 tools are categorized into five major sections: Strategic Planning, Shareholder and Customer Value, Lean Cost Management, Performance Measurement and Performance Evaluation.

But think toolbox versus novel. There’s no need to read the entire book from beginning to end (I didn’t). Instead, do a quick scan of the table of contents and the 40 tools, and then, to get your feet and mind wet, read three or four tool summaries. That gives you the big picture of what to expect from the book—and how to leverage the wisdom.

But this caution: the short chapters are so informative, you’ll have a tough time putting the book back on the shelf.

Example: Tool #38 – Recognition and Rewards. “Incentive compensation is almost without exception dysfunctional to some degree or another.

“…if an employee is unhappy because of problems with pay, status, or working conditions, he will not suddenly be motivated to greater effort and productivity by removing these problems. Motivation is intrinsic to the job. It is about responsibility, recognition, and personal development, and no amount of pay on its own will drive a person to higher levels of achievement. In one of [Frederick] Herzberg’s most telling metaphors, he said that, whereas a motivated person is self-powered by a generator, an unmotivated person is powered by a battery that needs constantly recharging.”

Each 10-page (or so) chapter gives a succinct paragraph definition and then a helpful and non-technical discussion of the tool. Then the authors list several bullet points to answer the questions: --What is the performance potential of this practice? --What actions do you need to take to maximize the potential of this practice? For the second question, they list both “Actions to Avoid” and “Actions to Take.”

Each chapter also includes a list of books and articles for further reading, and every chapter has numerous sidebar articles—most of them fascinating, memorable and quotable for your next staff or department meeting, such as:

“In a recent interview, legendary leader and former CEO of General Electric, Jack Welch, stated, ‘Shareholder value is the dumbest idea in the world.’ He added, ‘Shareholder value is a result, not a strategy … Your main constituencies are your employees, your customers and your products.”

The authors quote British economist John Kay, who said, “No one will be buried with the epitaph, ‘He maximized shareholder value.’”

There are more than 40 management tools, of course, but this book highlights the 40 relevant-for-today tools including: Mission Statements, Strategic Planning, Stretch Goals, Knowledge Management, Benchmarking, Sustainability, Loyalty Management, Activity-Based Costing, Key Performance Indicators, Performance Appraisals and Executive Compensation. While the book is written for leaders of for-profit enterprises, nonprofit leaders and managers will certainly find huge value in this unique toolbox.

In 1995, Harvard’s John Kotter pointed out that only 30 percent of change programs succeed. So…before you embrace a new tool (and create an unnecessary revolt in the trenches), read the book as part of your due diligence process. To order the book from Amazon, click on the graphic below for Beyond Performance Management: Why, When and How to Use 40 Tools and Best Practices for Superior Business Performance, by Jeremy Hope and Steve Player.

Your Weekly Staff Meeting Questions:1) The authors warn leaders not to select a performance management model that just happens to be the “flavor of the month.” Think back—here or in other places you’ve worked—where the “flavor of the month” approach failed to enhance organizational performance. What did you learn?2) In the chapter on the Mission Statements tool, the authors quote John Kay who writes, “Bogus rationality is probably best described as the kind of rationality that says, this is the way we are going to make decisions in a world in which we think we know much more than we (actually) do and believe we have much more control over it than we (actually) do. It is a process which has the appearance of rationality but in the end it doesn’t. It isn’t rational.”

Mitigate Workplace Stress - Insights from Mastering the Management Buckets: 20 Critical Competencies for Leading Your Business or Nonprofit

One of the big ideas in Chapter 10 in my book, Mastering the Management Buckets, is to “budget funds for “Hoopla!” to mitigate workplace stress and most importantly, to show our team members how much they are loved and appreciated!”

The authors of The Carrot Principle note that “according to a 10-year study of more than 200,000 employees, a whopping 79 percent of people who quit their jobs ‘cite a lack of appreciation as a key reason for leaving.’ Another 65 percent of North Americans ‘report that they weren’t recognized the least bit in the previous year.’” How tragic.

Purpose-based recognition, say the authors, involves meaningful recognition (not cash) in four areas: goal-setting, communication, trust and accountability. Their research shows that inspired moments of recognition act as “accelerators” for creating more effective and more profitable companies.

And get this: researchers asked employees what was the single greatest barrier to improving communication and trust with their managers. In almost every case, the first response was, “I never see her. She’s always in a meeting.”

For a link to The Carrot Principle: How the Best Managers Use Recognition to Engage Their Employees, Retain Talent, and Drive Performance, visit The Hoopla! Bucket webpage.

P.S. ECFA Blog on “Governance of Christ-centered Organizations” – Add your thoughts and comments to John Pearson’s weekly blog posts, including the latest, “Two Prayers and a Poem Are Not Enough!”

Comments

Great post. I am writing a paper about performance management so I have been doing a lot of research. That is how I came across your post. I am glad I did because this has been very helpful. Thanks so much for sharing.